Nvidia Gets Favorable ITC Ruling In Its Lawsuit Against Qualcomm & Samsung

-17.27%
Downside
885
Market
732
Trefis
NVDA: NVIDIA logo
NVDA
NVIDIA

In a Markman hearing (a pretrial hearing in the U.S. International Trade Commission), Nvidia (NASDAQ:NVDA)  received a favorable construction ruling on six out of the seven disputed claims for its patent infringement lawsuit against Qualcomm (NASDAQ:QCOM) and Samsung (OTC:SSNLF). Markman hearings are used in patent cases to define disputed terms of patents before a case goes to trial. The administrative law judge will rely on the claim constructions to rule on Nvidia’s infringement claims, when the final judgement is announced within the next few months. For the first time in its 22-year history, Nvidia initiated a patent lawsuit  last September  against Qualcomm and Samsung for allegedly infringing its GPU patents covering technology including programmable shading, unified shaders and multithreaded parallel processing, via their Snapdragon and Exynos application processors, respectively.

Two months after Nvidia’s lawsuit, Samsung hit back at Nvidia, accusing the company of infringing several of its semiconductor-related patents and for making false claims about its products. Samsung filed a lawsuit against Nvidia and a Virginia-based company, Velocity Micro (a small customer of Nvidia), in a U.S. federal court on November 4th. In addition to seeking damages for deliberate infringement of several technical patents, Samsung has accused Nvidia of false advertising with the statement that “the Shield tablet is powered by the world’s fastest mobile processor, the Tegra K1″. Samsung alleges that its Exynos 5433 processor is faster on a couple benchmarks, and cited benchmarking studies performed by researchers at Primate Labs. [1]

Nvidia countered the “false advertising” accusation by providing some benchmarks in a company blog that show the extent to which the SHIELD tablet outperforms Samsung’s device. The blog also suggested that Samsung, as one of the largest companies in the world, was suing its small customer to secure Virginia as the jurisdiction for the litigation. There has been no major development in Samsung’s lawsuit so far, and the judge denied Nvidia’s request to move the case to California.

Relevant Articles
  1. With A $2 Trillion Valuation, What Are The Risks For Nvidia Stock?
  2. Up 3x Over The Past Year, Will Q4 Beat Drive Nvidia Stock Higher?
  3. Up 3x This Year, Will The AI Surge Drive Nvidia Stock Higher Following Q3 Earnings?
  4. At $420, What Are The Risks For Nvidia Stock?
  5. What’s Next For Nvidia Stock After Blowout Q2
  6. Nvidia Dominates AI Silicon, But That Doesn’t Justify A $1 Trillion Valuation

Nvidia competes with Qualcomm and Samsung through its Tegra processor lineup. After growing at a robust rate in fiscal 2012 and 2013, Nvidia’s Tegra revenue declined 48% in fiscal 2014. The company saw its Tegra revenue decline significantly in the first half of fiscal 2014 due to the ramp down of Tegra 3 products and the company’s conscious decision to delay the launch of Tegra 4 by one quarter, in order to pull up the production of Tegra 4i chips. Nvidia retained its growth momentum in fiscal 2015, with the Tegra revenue base expanding by 45% during the year.

While mobile computing has been a key focus area and the largest segment for Nvidia’s Tegra business in the last few years, the company claims that automotive applications and the SHIELD (Nvidia’s gaming device) now represent the vast majority of its Tegra revenue. Nvidia expects the two segments to be the biggest growth driver for its Tegra division in fiscal 2016. (Read: Automotive & Shield To Drive Nvidia’s Tegra Business In Fiscal 2016)

Our price estimate of $23 for Nvidia is marginally higher than the current market price.

See our complete analysis for Nvidia

View Interactive Institutional Research (Powered by Trefis):

NVIDIA just announced that the 32GB LTE variant of the Shield is now available for pre-order. $399 buys the unlocked LTE tablet in its own right, but NVIDIA tells us that AT&T will be offering it for $299 on contract.
Notes:
  1. Samsung Just Cranked Up Its Legal Battle With Chipmaker Nvidia, Business Insider, November 11, 2014 []